> The 4% rule may not be entirely reliable. See: Ben Felix’s YouTube video on the topic.

Felix (and Cameron) recently interviewed Bengen (who came up with the rule) on their Rational Reminder podcast, and it may actually be 4.5% now:

* https://rationalreminder.ca/podcast/135

* https://www.youtube.com/watch?v=_nYTrCxluaY

In 2006 he had it at 4.5% and in October 2020 at 5%:

* https://www.fa-mag.com/news/choosing-the-highest-safe-withdr...

The reason being is inflation.

The really high inflation of the 1970s (and 1980s) chewed up savings for retirees and brought down SAFEMAX down, but in the 1950s and '60s it was actually 5% per Bengen.

2% is awfully difficult to achieve without some radical lifestyle adjustments before and certainly after retirement.

Nonetheless, it’s a good idea. Instead of cash, however, I would opt for paid part-time work if possible.

A large cash reserve isn’t protected against inflation nor will it grow; the downsides are too big imho.

Agreed. This may be what your video talks about, but the decrease in interest rate over the last 40 years has a lot to do with the increase in stock market valuations. Interest rates are E/P, the correspondence with a stock market P/E is straightforward. Interest rates are now at zero and can only go in the opposite direction. And probably will since everybody is now concerned about inflation.

> Interest rates are now at zero and can only go in the opposite direction.

Are you asserting interest rates can only go up from zero? Or only down? And for either direction, why?

I think it is warranted to have a conservative estimate given the aging of the population pyramid. There will be more demand for labor relative to supply than post WW2 decades which saw the opposite, increasing amounts of supply of labor relative to demand.

Although, more than cash, a few loyal and useful kids would be a much better play to mitigate those risks.